In the last trading session of the first year of ‘renewable energy certificates' trading on Wednesday, prices of the certificates fell 5.4 per cent on the Indian Energy Exchange, the exchange that accounts for over 95 per cent of REC trading. This, according to market observers, is perplexing, because everybody was expecting prices to rule firm, as Wednesday was the last opportunity for the ‘obligated entities' to meet their renewable purchase obligation this year.

“The results are certainly disappointing for all the sellers and reflects the need for stronger enforcement signals,” says Mr Vishal Pandya of REConnect, a consultancy that operates in the REC space.

On the IEX, 192,354 RECs were traded at an average price of Rs 2,900. Prices were slightly higher, at Rs 3,100, on the other market, the Power Exchange India Ltd, but the volume details had not been disclosed at the time of writing this report.

Mr Pandya, whose clients accounted for nearly half of the trading, feels that there could be two reasons for the tepid prices. First, the seller could have bid low in the anticipation of clearing all the volume with compliance year ending. Second, the buyers may have been not keen on meeting their obligations in the anticipation that they may be allowed to carry forward the pending RPO compliance to next year.

mramesh@thehindu.co.in

(This article was published on March 28, 2012)
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